Posted by David Keelan on Monday, October 6, 2008
While some may not find a report from Fox News to be compelling (to each their own) they are certainly not the only organization who has a similiar spin on this issue.
Moshe Orenbuch, a Credit Suisse analyst who follows the mortgage industry, says Fannie and Freddie came under the same pressures that led private mortgage firms and companies in other industries to restate income related to derivatives. Fannie and Freddie continued to write loans after the credit markets seized up in 2007 in order to fulfill their public mission, (affordable housing) leaving them with a greater share of the market and more problem loans. “If you take market share without tightening criteria, you effectively loosen,” notes Orenbuch.
As we saw from the CSPAN video on the previous post democrat after democrat mocked the OFHEO for calling out problems at Frannie and Freddie.
In recent years, regulators did raise questions about management at the government-sponsored housing lenders. In 2006, the Office of Federal Housing Enterprise Oversight (OFHEO), which monitors the financial health of Fannie Mae and Freddie Mac, released a report describing an arrogant and unethical culture at Fannie Mae where employees manipulated earnings to generate higher bonuses for executives between 1998 and 2004. “Our examination found an environment where the ends justified the means. Senior management manipulated accounting; reaped maximum, undeserved bonuses; and prevented the rest of the world from knowing. They co-opted their internal auditors. They stonewalled OFHEO,” said James Lockhart, the director of OFHEO when the report was released.
While the Bush Administration called it out, and various members of Congress (mostly GOP) called for stricter regulation, Barney and Nancy and their cohorts stonewalled.